[url=http://www.reuters.com/article/idUSTRE6850VN20100906]Sarkozy to press currencies role for G20[/url]
By Paul Taylor
Sep 6 2010
President Nicolas Sarkozy has set an ambitious agenda of creating a new international monetary system and taming commodity speculation for France’s presidency of the G20 global economic leadership forum from November.
Sarkozy’s agenda may appeal to the emerging economies of China India Brazil and Russia irked by the dollar’s hegemony while offering sufficient incentive to draw in the United States and Britain despite their belief in floating exchange rates.
Economy Minister Christine Lagarde said France would use its G20 chair to discuss proposals for wider use of International Monetary Fund special drawing rights (SDRs) as a global reserve currency — an idea mooted by China’s central bank chief.
Russia too wants an alternative to the dollar’s role as a global unit of account while India and Brazil among others have sought to conduct more foreign trade in national currency.
French officials believe such a discussion would be of a sufficiently long-term nature to be unthreatening to the United States while providing political cover for China which has two-thirds of its reserves in dollars to inch forward in letting the yuan appreciate.
Beijing is keen to diversify its holdings and reduce its dollar dependence over time without precipitating a sharp fall in the U.S. currency that could destabilize the international financial system and devalue its own assets.